Like buses, you wait months for a European chemicals M&A deal, and then two come along at once, with news Wednesday of BASF taking over privately held Cognis. [Read our coverage here.]

But don’t expect much euphoria among bankers at Deutsche Bank, who might instead have to remind their core relationship client BASF that the buy will add value only if it’s followed by asset disposals. We are eager to hear how the German company intends to position its still highly cyclical business now that last year’s rebound is fading.

In the week that Akzo Nobel offloaded its non-core National Starch unit for $1.3 billion (1.1x sales), BASF’s sound corporate strategy might give the M&A market a much needed confidence boost with a deal worth at least €3.1 billion for debt-laden Cognis.

If BASF is serious about maintaining an 18% Ebitda margin over the next three years it must decisively lessen its exposure to the construction and auto sectors by diversifying its asset base away from Europe, while also adding a green technology platform to its business mix.

Being acquisitive or seeking JVs in Asia and the Middle East could easily be the way forward, but to maintain its current (single-A) investment-grade credit rating, such moves should be funded by asset sales.

BASF’s core businesses are performance products, chemicals, plastics and oil & gas, all of which will struggle in the coming months if the cycle turns sour. The German company needs to diversify its asset portfolio away from mature, highly cyclical end markets, as the planned disposal of the styrenics business alone won’t solve its portfolio’s cyclicality.